4 Considerations To Create a Gradual Retirement Plan For Physicians

No matter your age, how long you've been practicing medicine, or what specialty you've chosen… one wise decision for physicians is to create a gradual retirement plan with goals and actionable steps to get you there. 

But quite often, I am asked by my friends and colleagues as they move closer to reaching those goals, is this: “Is it better to undershoot or overshoot your retirement goals?” 

I tell people they have two choices to make based on the concept of gradual retirement. After all, there are different ways to think about retirement. Your first choice is to delay your plan, providing you with time now with your family. The second choice is to overshoot your goal, using your time now to work full time during their prime time to enjoy family and life.

Honestly, it's not an easy choice, and there are no bad answers. But I'd like to share my thoughts on how you can determine your own retirement goals. Here are four points to consider as you make the best decision for you and your family. 

1. Start by Defining Your Retirement Goals

Before you decide whether it’s better to undershoot or overshoot your retirement goals, you must define those goals. It sounds simple, but many physicians know that planning for retirement is critically important, yet they haven’t defined their own retirement goals.

So what is “financial freedom?” It’s having the means to do whatever you want without having to work if you choose not to. That could be teaching, starting another business, traveling, or spending time with loved ones; the list is endless. The best part… you get to choose.

Thanks to income from my practice as an anesthesiologist and my passive income from investments, I could achieve financial freedom earlier than I had planned. But that was my retirement goal; hopefully, you have your own. Once you have it, you can decide whether undershooting or overshooting that goal is better for you.

Is it better to overshoot or undershoot your retirement Goals? Here’s what Peter has to say about that, listen to podcast episode #128

2. Finding Your Work/Life Balance

If you overshoot your retirement goals, you’ll be giving up prime time to enjoy what life offers. That time may include time with family, having the time to travel, or doing anything that would make you happy.

Instead, you’ll be working long hours, missing out on life’s treasured moments like birthday celebrations, school plays, soccer games, or a myriad of things couples and families like to do together. I know from personal experience of working many nights in a row, as well as weekends, that you can approach burnout quickly.

Sure, you’ll be pumping a lot of income into your retirement nest egg and accelerating your goal of reaching financial freedom sooner than you hoped. But what are you giving up to have those extra funds? 

That’s a question only you can answer, and it’s how you will find your work/life balance. It’s the “happy place” where you are enjoying your work and working towards financial freedom while you still have the time to enjoy all that life offers.

On the other hand, if you undershoot your retirement goals, you’ll have the time to be present with your family. There’s one thing we all should remember: you can never, ever get that time back. 

Here’s one other consideration that physicians see in the life of their patients every day, you are in constant full awareness that life can change in the blink of an eye. By setting smart retirement goals, you can find a smart work/life balance to enjoy life in your prime time.

3. The Regrets People Have

When looking through articles and stories from people who are in the twilight stage of life, nobody ever reflects with regrets about not having more money. They universally regret not spending more time with their families or friends. The truth is, when you realize that your time is winding down, you’ll wish you could reverse the clock and have that time back.

So, what can you do? 

If you just give up practicing medicine, you’ll have another set of regrets. I know I would– I enjoy being a physician. 

But here’s where most people make a mistake… It doesn’t have to be an “either/or” situation. You don’t have to give up 100% of your practice to devote 100% of your time to enjoying your family. There are several options for you to practice medicine on your own terms that fit the lifestyle you want to enjoy when you step away from full-time medicine. This leads me to my final point…

Still wondering what “gradual retirement” is all about? Tune in for 60 seconds, here is the short of it…

4. A Happy Alternative

What if you start by reducing your workload by 10%? Later you bump it up to 20%? You’d still be enjoying the profession that you trained years for, you’d still be spending more time with your loved ones, and most importantly, you'd still be funding your retirement to help you achieve financial freedom. In fact, that’s one of the myths many physicians have – that you have to fully retire to enjoy the benefits of financial freedom.

That’s where the concept of “gradual retirement” comes into play. Start by slowly cutting back on your workload. The key word here is “slowly.” You don’t have to do it all at once. You do it gradually so you can still fund your retirement and meet your goals. 
There are many options available for physicians to practice with alternative schedules. You could cut back on expenses to offset the lost income from working too many hours. Even better, you could start replacing your practice income with passive income from investments. Eventually, your passive income can replace all your income, so you can choose when and how much to work. And the earlier you begin preparing for it, the better off you’ll be. This was my goal, which I achieved much faster than I originally planned.

Interested in learning more? Check out this podcast on 5 Key Characteristics of Physicians Well-Prepared for Retirement

A Final Thought

Gradual retirement isn’t a new concept. In fact, many physicians and other high-income earners have been doing this for a long time. But it is a new concept for many younger physicians who are choosing to work as much as possible in order to save, pay off student loans, and buy a home. 

As you work towards retirement, remember you can “course correct” anytime! If you need additional money, you can always add hours or shifts to make up for the income you’ve left on the table. Or if you’re finding you’re not spending enough time with loved ones, you can pass off a shift to a physician who needs it. Don’t forget that change is possible and often inevitable; you can decide whether it’s better to start by undershooting or to overshoot your retirement goals so that you can enjoy your life both in retirement and now.